Critical Illness Cover - Is It Worth It? - Hot Topics Q&A

Q. I'm thinking about applying for some critical illness cover. I'm in two minds about it as I have life assurance and income protection. I see that most plans cover a number of conditions. What figures are available for the claims paid out for these companies? I want to know that they actually honour their commitments to policyholders.

A. Critical illness cover is a very important safety net for the right people. Where someone has not built up many assets, the cover can provide an injection of cash when most needed, especially as the recipient will not know what the condition will be in advance. They may be diagnosed with a qualifying condition and make a speedy recovery, or the condition could be for a considerable period of time, even permanent. 

The money could then be used to modify a home, repay a mortgage/debts or pay for treatment. You should view your income protection as the most important cover as at least, in the event of a claim, you will have a basic level of income (depending on how much cover you have) to pay for life's necessities. 

Now to answer your question. Looking at the claims statistics for one of the major life assurance companies in this area, Scottish Provident, we can see in 2007 they paid out over £93.6 million in claims. 

The major conditions claimed for were:

• cancer (58%)
• heart attack (14%)
• multiple sclerosis (7%)
• stroke (6%)

Interestingly, the average age of a MS claimant was 39, therefore this underlines the need to take cover from a young age. 

Companies such as Scottish Provident take all claims seriously, and are keen to ensure they have a good claims record. After all, would you want to insure yourself with a company that had a history of not paying valid claims?

There are other companies to choose from, so make sure you do thorough research before you choose a provider as you want to try and get your choice right at the outset, rather than having to change provider after a few years (when you may not be able to change if your health has deteriorated). 

Good luck!